Item #02
Date: June 24, 2026
To: Mayor and City Council
From: Jim Schaad, City Manager
Subject: First Amendment to Tax Sharing Agreement and Appropriations Limit Adjustment Between the City of Marysville and the Linda Fire Protection District Recommendation:
Adopt a Resolution approving the First Amendment to the Tax Sharing Agreement and Appropriations Limit Adjustment Between the City of Marysville and the Linda Fire Protection District and authorize the City Manager to execute the Amendment, subject to approval by Resolution of the Linda Fire Protection District Board of Directors.
Background:
On June 17, 2025, the Marysville City Council adopted a resolution initiating the reorganization of fire protection services through annexation of the City's fire service area into the Linda Fire Protection District. The proposal was subsequently reviewed by the Yuba County Local Agency Formation Commission (LAFCO) and approved on September 24, 2025. The Certificate of Completion was recorded on November 24, 2025, completing the reorganization.
As part of the annexation process, the City of Marysville, Linda Fire Protection District, and Yuba County entered into a Tax Sharing Agreement and Appropriations Limit Adjustment to establish the allocation of property tax revenues and sales tax revenues associated with the annexed territory. The Agreement was approved by the City Council on July 15, 2025, and subsequently by the Linda Fire Protection District Board of Directors, and the Yuba County Board of Supervisors and was incorporated into the LAFCO approval process.
The Agreement established two separate revenue sharing mechanisms. Section 3 established a property tax allocation whereby Linda Fire Protection District receives forty percent (40%) of property tax revenues associated with the annexed territory. Section 4 established a sales tax sharing provision whereby Linda Fire Protection District receives forty-one and one-half percent (41.5%) of local sales tax revenues generated within the annexed territory.
Following approval of the Agreement and during implementation of the annexation, representatives of the City and Linda Fire Protection District reviewed the financial assumptions utilized in calculating the sales tax sharing percentage contained in Section 4 of the Agreement. Through that review, the parties mutually determined that certain revenue data utilized in the calculation should be corrected.
Application of the originally agreed-upon methodology using the corrected revenue data results in a revised sales tax sharing percentage of 31.0 percent rather than 41.5 percent.
Discussion & Analysis:
The purpose of the proposed First Amendment is to revise the sales tax sharing percentage contained in Section 4 of the Tax Sharing Agreement from 41.5 percent to 31.0 percent.
The proposed amendment does not modify the methodology utilized by the parties in developing the original Tax Sharing Agreement. Rather, the amendment applies the originally agreed-upon methodology using corrected revenue data that has been reviewed and accepted by both parties.
The proposed amendment does not modify:
• The annexation approved by LAFCO;
• The property tax allocation contained in Section 3 of the Agreement; • The transfer of fire protection responsibilities;
• Governance or representation provisions;
• Development impact fee provisions;
• Appropriations limit adjustments; or
• Any other substantive provision of the Tax Sharing Agreement.
The amendment is intended solely to ensure that the Agreement accurately reflects the sales tax sharing percentage produced by application of the methodology originally utilized by the parties.
Staff believes approval of the amendment is appropriate because it preserves the original methodology, maintains the intent of the Agreement, and ensures that future sales tax allocations are based upon corrected financial information agreed upon by both agencies.
Environmental Impact:
Approval of the proposed First Amendment is not a project subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378 because it involves organizational, administrative, and fiscal activities that will not result in a direct or reasonably foreseeable physical change in the environment. Future improvements requiring permits or discretionary approvals will be reviewed separately for CEQA compliance as required.
Alignment with City Council Goal(s):
This action supports City Council goals related to Increasing Fiscal Sustainability and Enhancing Public Safety
Legal Review:
The City Attorney has reviewed the First Amendment to the Tax Sharing Agreement and Appropriations Limit Adjustment and approved it as to form.
Fiscal Impact:
The proposed amendment will revise the sales tax sharing percentage allocated to Linda Fire Protection District from
41.5 percent to 31.0 percent.
The amendment does not modify the property tax allocation percentage contained in Section 3 of the Agreement, which remains at 40 percent.
Based upon current sales tax revenues, approval of the amendment is expected to increase the amount of sales tax revenues retained by the City and correspondingly reduce the amount allocated to Linda Fire Protection District.
Actual annual amounts will vary depending upon future taxable sales activity and sales tax receipts within the annexed territory.
Council Options
Option 1 – Approve the Amendment as written and authorize execution of the agreement (Staff’s Recommendation)
Option 2 – Approve the Amendment with revisions. Depending upon the nature of the requested revisions, additional review by Linda Fire Protection District and legal counsel may be required.
Option 3 – Decline approval and direct staff to continue negotiations with Linda Fire Protection District regarding one or more provisions of the agreement.
Attachment(s)
Attachment A - First Amendment to the Tax Sharing Agreement and Appropriations Limit Adjustment Between the City of Marysville and the Linda Fire Protection District.
Attachment D - Resolution No. 2025-27 Approving the Tax Sharing Agreement and Appropriations Limit Adjustment.
Attachment C - Executed Tax Sharing Agreement and Appropriations Limit Adjustment Attachment D - Resolution 2025-027 Linda Fire Annexation Tax Sharing Agreement Attachment E - Summary of Original and Corrected Sales Tax Sharing Calculations.