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01-25-2000 CC Rpt A16 • 4 r COUNCIL AGENDA STAFF REPORT CITY CLERK USE ONLY RECtVED Meeting Date: January 25.2000 "7:t✓� Public Hearing: ❑ '00 JAN 18 A10 28 Discussion Item: I C7"'" '°'°'" Consent Item: ❑ OFFlt::I OF GM' CLE..i;°( r-k- I mr) I- I I C January 18, 2000 TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: CITY MANAGER SUBJECT: PROPERTY TAX ALLOCATION AGREEMENT WITH COUNTY OF SAN BERNARDINO RECOMMENDATION: It is recommended that the City Council approve the agreement with the County of San Bernardino for the increased allocation of ad valorem property taxes resulting from the construction of improvements on commercial or industrial property within the City of Chino Hills. BACKGROUND/ANALYSIS: In 1996 the City began negotiating with the County of San Bernardino for an increase in the allocation to the City from the County of ad valorem property taxes. The City aggressively pursued the negotiations as the City's property tax allocation is one of the lowest in the County of San Bernardino and the City's General Fund revenue base needed to be strengthened to help fund the public safety services and other services that the City provides for its citizens and businesses. The City receives only 3.9 percent of the one percent ad valorem tax rate on all property within the City. The City began negotiating with the County following the City's attempt to increase its property tax allocation via State legislation. This legislation(Senate Bill 1422)stalled when its author, Senator Ayala,decided not to continue supporting the bill until the City and County negotiated an agreement. Once the City and County negotiated an agreement(as described below),a new bill was authored by Senator Ayala(SB 549). However,Governor Wilson vetoed this bill in 1998. The City and County continued to pursue legislation and Senator Baca agreed to author legislation (SB 166) in 1999, which was signed by Governor Davis in spring 1999. The bill authorized the City and County to enter into a property tax allocation agreement under a specific set of terms. 4210 • AGENDA DATE: JANUARY 25, 2000 SUBJECT: PROPERTY TAX ALLOCATION AGREEMENT WITH COUNTY OF SAN BERNARDINO PAGE TWO Following Senator Ayala's recommendation,the City and County began negotiating the terms of an agreement. While the City desired an increased property tax allocation on all properties,residential as well as commercial/industrial, the County vigorously opposed an increased allocation on residential property. After several negotiating sessions,the City and County agreed to an increased allocation exclusively based on increased valuations on commercial/industrial property caused by new construction or major renovations. Additionally,it was agreed that the rate increase would be based on an even split of the two agencies' property tax allocation rates. Other terms were also negotiated. A summary of the terms of the agreement are as follows: • The City will receive, as a Revenue Transfer,an additional 5.43 percent of the 1 percent on qualifying increases in assessed valuation for commercial and/or industrial property. (Specified Properties). Note: The above 5.43 percent rate was derived from splitting the combined City and County share of the property tax allocation. In rounded amounts, the City's allocation rate of 3.9%was combined with the County's allocation rate of 14.7%;the combined rate of 18.6% was split, 9.30% each to the County and the City; therefore, the City's overall allocation rate is being increased by 5.4% (from 3.9% to 9.3%) and the County's overall allocation is being reduced by 5.4% (from 14.7%to 9.3%). • Qualifying increases in assessed valuation include increases resulting from any improvements constructed on vacant commercial and/or industrial properties ("Specified Properties")and increases of at least$1 million resulting from the renovation or expansion of existing structures on commercial and/or industrial property. The City would not receive any increased property taxes caused by inflationary increases in assessed valuation on the Specified Property. • The agreement expires the earlier of the end of the 2036-37 fiscal year or the year in which the City forms a redevelopment agency. The County or the City can terminate the agreement with or without cause on December 1st of a fiscal year. • The City shall supply to the County a list of the qualifying commercial and industrial property and the properties on which construction occurred during a fiscal year. • The County shall deduct from the annual Revenue Transfer the County's direct and indirect costs that it incurs in fulfilling its duties and obligations under this agreement. A copy of the agreement that contains the above provisions is attached to this staff report. The potential amount of revenue that the City could receive for the probable 36-year revenue generating life of the agreement is about $500,000. The amount of revenue is dependent on the scope and timing of any development that may occur. The County has been cooperative in developing the agreement and supporting the necessary legislation that would allow implementation of the agreement. The County's cooperation stems from the City's unique position to attract economic development that would benefit the County,as well as the City. The City could secure commercial/industrial development that could locate in Los Angeles, AGENDA DATE: JANUARY 25, 2000 SUBJECT: PROPERTY TAX ALLOCATION AGREEMENT WITH COUNTY OF SAN BERNARDINO PAGE THREE Orange,or Riverside Counties. Both the City and County would benefit from increased employment opportunities and increased revenue(property tax and sales tax)which would enhance the City's and County's economic base. County Staff will be presenting the agreement to the Board of Supervisors for their consideration during the second week of February 2000. FISCAL IMPACT: The property tax allocation agreement provides the potential of increasing the City's property tax allocation received from the County. The City could receive$500,000 over the 36-year life of the agreement, depending on the scope and timing of the agreement. Respectfully submitted, Recommended by: ir4f � ��. IPougl. • N. La Belle, City Manager V`'Stan McCartney, Finance Director DLB:SCM:ssr Att. C:AGENDA\.012500PROPTAXAILAGMT cry . AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES This Agreement is entered into as of 02h1?0V , by and between the County of San Bernardino ("County") and the City of Chino Hills ("City"). The parties hereby agree as follows: Recitals A. On June 28, 1999, Senate Bill 166 was signed by the Governor and filed with the Secretary of State. SB 166, which is set forth at Stats. 1999, Chap. 45, authorizes the County and City, subject to certain requirements and limitations, to enter into a written agreement for the annual transfer from County to City of a specified percentage of certain additional ad valorem property tax revenues that are attributable to certain classes of improvements to commercial or industrial properties that are identified in the agreement. B. County and City desire to enter into an agreement as authorized by SB 166, and set forth such agreement herein (the "Agreement"). NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Term. This Agreement applies to the 2000-2001 fiscal year and each succeeding fiscal year through the 2036-2037 fiscal year(the "Term"), unless terminated pursuant to paragraph 4 below. 2. Specified Properties. (a) This Agreement applies to certain commercial or industrial property, referred to in this Agreement as the "Specified Properties." City shall provide a written report to the County Assessor that lists each of the Specified Properties and the "Improvements" to the Specified Properties. City shall provide this report to County no later than the March 1 prior to the fiscal year for which a Revenue Transfer(described in paragraph 3 below) is to be made for the Improvements set forth in such report. The term "Improvements," as used in this Agreement, means (i) a renovation or expansion of an existing structure or structures that results in an increase in assessed value of at least one million dollars ($1,000,000), or (ii) a new structure or structures. The County Assessor shall inform the County Auditor/Controller of the Specified Properties and Improvements in order for the County Auditor/Controller to determine the Revenue Transfer, as described in paragraph 3 below. (b) City hereby warrants that each of the Specified Properties it identifies during the term of this Agreement is located within the geographic boundaries of City and is classified as commercial or industrial real property. In the event any of the Specified Properties becomes classified as a type of property other than commercial or industrial, or is no longer located in City, then such property shall no longer be considered a Specified Property. 1 3. Revenue Transfer. (a) Each year during the Term of this Agreement, the County Auditor/Controller shall make a revenue transfer from the County to the City as required herein. This transfer shall be referred to herein as the "Revenue Transfer." The Revenue Transfer shall be in an amount equal to 5.43 percent of those additional property tax revenues that are derived from Improvements to the Specified Properties made on or after January 1, 1999, as determined by the County Assessor. The Revenue Transfer for each fiscal year shall be based on Improvements in existence on or before the lien date applicable to such fiscal year. In years subsequent to the first year of a Revenue Transfer for each Specified Property, the Revenue Transfer shall include the pro- rata share of any increase or decrease in total property tax for such Specified Property. (b) The County Auditor/Controller shall implement the Revenue Transfer from County to City by commensurately adjusting apportionments of ad valorem property tax revenue, previously determined as otherwise provided by law. The Revenue Transfer from the County to City shall be made after all required allocations have been made. The Revenue Transfer for each fiscal year shall be made no later than the last day (June 30) of such fiscal year. 4. Termination. (a) This Agreement shall terminate automatically as of the date any land located in City is included within a redevelopment project 1 area. City shall provide written notice to the County Auditor/Controller if any land located in City is included within a redevelopment area; In the event of termination pursuant to this paragraph 4(a), County shall not make any Revenue Transfers pursuant to this Agreement on or after the effective date of such termination. (b) This Agreement shall terminate if written notice of termination is given by County or City in the 2001-2002 fiscal year, or any fiscal year thereafter, if any modification by the Legislature of the requirements for the allocation or apportionment of ad valorem property tax revenues necessarily requires a changes, from the immediately preceding fiscal year, in the ratio of the total amount of ad valorem property tax revenue received by County to the total amount of ad valorem property tax revenue received by City. In the event of termination pursuant to this paragraph 4(b), County shall not make any Revenue Transfers pursuant to this Agreement on or after the effective date of such termination. (c) County or City may terminate this Agreement, with or without cause, effective as of the first day of any fiscal year (July 1), provided that written notice of such termination is given no later than the December 31 preceding the July 1 effective date of such termination. In the event of termination pursuant to this paragraph 4(c), City shall continue to receive Revenue Transfers during the Term of this Agreement based on Improvements to Specified Properties identified for fiscal years prior to the termination. 2 ( ) 5. Reimbursement of Costs. City shall reimburse County for County's direct and indirect costs of fulfilling its duties and obligations under this Agreement and SB 166. County shall inform City of the amount of such costs, and the costs shall be deducted each year by County from the Revenue Transfer provided to City. The amount of the annual reimbursement to the County by the City under this paragraph 5 shall not exceed the amount of the annual Revenue Transfer. 6. Cooperation. The parties will reasonably cooperate with each other in implementing the terms of this Agreement. 7. Amendment. Any amendment to this Agreement must be made in writing and signed by all parties hereto. 8. Waiver. The waiver by any party to this Agreement of a breach of any provision of this Agreement by the other party shall not be deemed a continuing waiver or a waiver of any subsequent breach of the same or any other provision hereunder. Effective on the date hereinabove set forth. COUNTY 0 AN BERNARDINO Date: FEB 0 8 2000By .. ©0���� Jon DCMckels Chairman, Board of Supervisors CITY OF CHINO HILL. Date: Gat-1u.a(V2600 By Mayor ATTEST a 5 1 KLN/147263 Linda D. Ruth, City`C1erk 10/20/99 SIGNED & CERTIFIED THAT A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE •„ •IRMP,I�.. .OF.,, 'HE BOP EARLEN ' PROM' 7 . °,,, Cie • if✓ Board of .....' i 4 , IF . if intsi,:?-t::::,,ii id* ;,),, :S' t.J 4 t ) ( ) EXHIBIT'A AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES CITY OF CHINO HILLS List of Commercial and Industrial Parcels as of January 1, 1999 ASSESSOR'S PARCEL ZONING NUMBER ACRES DESIGNATION Developed Parcels 1000-051-23 - 0.065 Commercial Recreation 1000-051-23 0.048 Commercial Recreation 1000-051-23 0.174 Commercial Recreation 1000-051-26 5.957 Commercial Recreation 1000-051-26 25.476 Commercial Recreation 1000-085-01 0.147 Neighborhood Commercial 1000-101-20 0.317 Neighborhood Commercial 1017-012-02 4.888 Commercial Recreation 1023-011-53 11.744 General Commercial 1023-011-54 1.015 General Commercial 1023-011-57 11.816 General Commercial 1023-331-01 8,599 General Commercial 1023-491-40 1.592 General Commercial 1023-491-41 1.171 General Commercial 1023-491-44 0,923 General Commercial 1023-491-45 0.671 General Commercial 1023-491-48 1.524 General Commercial 1024-041-37 1.255 Neighborhood Commercial 1024-041-38 4.602 Neighborhood Commercial 1024-041-39 0.931 Neighborhood Commercial I 1024-041-40 0.399 Neighborhood Commercial 1024-041-41 0.388 Neighborhood Commercial 1024-041-42 0.529 Neighborhood Commercial 1024-041-43 0.599 Neighborhood Commercial 1024-041-44 0.408 Neighborhood Commercial 1024-461-07 2.241 Neighborhood Commercial 1025-081-36 5.96 General Commercial 1025-081-37 0.698 General Commercial 1025-091-06 0.619 Neighborhood Commercial 1025-091-07 1.049 Neighborhood Commercial 1025-102-01 0.093 Neighborhood Commercial 1025-231-03 0.945 General Commercial 1025-231-06 7.293 General Commercial 1025-231-07 19.958 General Commercial 1025-251-08 1.028 Neighborhood Commercial 1025-251-09 1.752 Neighborhood Commercial 1025-251-10 0.241 Neighborhood Commercial 1 EXHIBIT A AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES CITY OF CHINO HILLS List of Commercial and Industrial Parcels as of January 1, 1999 ASSESSOR'S PARCEL ZONING NUMBER ACRES DESIGNATION Developed Parcels 1025-251-11 2.092 Neighborhood Commercial 1025-251-12 0.487 Neighborhood Commercial 1025-251-13 0.368 Neighborhood Commercial 1025-251-14 0.922 Neighborhood Commercial 1025-251-16 1.058 Neighborhood Commercial 1025-251-17 0.664 Neighborhood Commercial 1025-421-04 7.562 Neighborhood Commercial 1028-092-09 0.133 Neighborhood Commercial 1028-092-10 0.134 Neighborhood Commercial 1028-162-11 0.475 Neighborhood Commercial 1028-162-12 0.489 Neighborhood Commercial 1028-174-08 0.208 Neighborhood Commercial 1028-174-09 0.156 Neighborhood Commercial 1028-351-04 0.599 General Commercial 1028-351-10 183.121 Commercial Recreation 1028-351-15 27.069 Business Park 1028-351-16 2.62 Neighborhood Commercial 1028-351-19 12.136 General Commercial 1028-351-29: 3.978 Neighborhood Commercial 1028-471-01 141,174 Commercial Recreation 1031-011-01 6.676 Commercial Recreation 1031-011-12 14.271 Commercial Recreation 1031-011-14 26.657 Commercial Recreation 1031-011-15 5.091 Commercial Recreation 1031-011-16 9.565 Commercial Recreation 1031-011-17 5.615 Commercial Recreation 1031-011-18 13.584 Commercial Recreation 1031-011-23 3.125 Commercial Recreation 1031-011-37 1.126 Commercial Recreation 1031-011-40 73.273 Commercial Recreation 1031-011-43 0.253 Commercial Recreation 1031-121-00 3.667 Commercial Recreation 1031-131-00 5.181 Commercial Recreation 1031-141-00 8.797 Commercial Recreation 1031-151-00 1.468 Commercial Recreation 1031-161-00 0.039 Commercial Recreation 1031-161-00 0,57 Commercial Recreation 1031-171-00 1.652 Commercial Recreation 1031-171-00 2.2 Commercial Recreation 1031-171-53 0.783 Commercial Recreation 1031-201-03 0,501 Commercial Recreation 1032-161-01 11,854 Neighborhood Commercial 2 i 1 EXHIBIT'A AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES CITY OF CHINO HILLS List of Commercial and Industrial Parcels as of January 1, 1999 ASSESSOR'S PARCEL ZONING NUMBER ACRES DESIGNATION Developed Parcels 1032-261-10 0.467 Neighborhood Commercial 1033-171-01 24.097 Commercial Recreation 1033-171-02 5.87 Commercial Recreation 1033-171-03 2.091 Commercial Recreation 1033-171-04 7.226 Commercial Recreation 1033-171-05 2.232 Commercial Recreation 1033-171-06 6.962 Commercial Recreation 1033-171-07 7.796 Commercial Recreation 1033-171-08 13.588 Commercial Recreation 1033-171-09 15.238 Commercial Recreation 1033-171-10 41.591 Commercial Recreation Undeveloped Parcels 1000-011-19 46.784 Neighborhood Commercial * 1000-011-19 111.771 Neighborhood Commercial * 1000-011-20 146.264 Neighborhood Commercial * 1000-011-20 9.032 Neighborhood Commercial * 1021-561-01 13.405 Business Park 1021-601-01 9.162 Business Park 1021-591-03 12.025 Business Park 1021-601-04 8.269 Business Park 1021-591-01 9.454 Business Park 1021-611-03 2.15 Business Park 1000-011-08 5.409 Neighborhood Commercial 1000-011-08 5.384 Neighborhood Commercial 1000-131-03 0.569 Neighborhood Commercial 1017-231-10 8.498 Neighborhood Commercial 1017-231-12 5.542 Business Park 1017-231-14 1.358 Neighborhood Commercial 1017-231-15 0.737 Neighborhood Commercial 1017-231-16 0.415 Neighborhood Commercial 1017-231-17 0.414 Neighborhood Commercial 1017-231-18 1.539 Neighborhood Commercial 1017-231-19 2.618 Neighborhood Commercial 1017-231-20 2.012 Neighborhood Commercial 1017-231-21 1.784 Neighborhood Commercial 1017-231-29 17.872 Business Park 1017-231-38 0.391 Business Park 1017-241-49 7.6 Neighborhood Commercial 1021-611-02 8.035 Business Park 1021-601-03 0.183 Business Park * Only portion of the property is designated to the specified zoning classification. 3 i, ) ( ) EXHIBIT A AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES CITY OF CHINO HILLS List of Commercial and Industrial Parcels as of January 1, 1999 ASSESSOR'S PARCEL - ZONING NUMBER ACRES DESIGNATION Undeveloped Parcels , 1021-611-06 1.566 Business Park 1021-581-17 1.655 Business Park 1022-291-07 0.929 Genera Commercial 1022-291-09 .4.619 Genera Commercial 1023-011-45 4.98 Genera Commercial 1023-011-46 14.366 Genera Commercial 1023-011-52 22.971 Genera Commercial 1023-011-55 4.144 Genera Commercial 1023-011-58 10.679 Genera Commercial 1023-011-59 4.35 Genera Commercial 1023-011-60 0.862 Genera Commercial 1023-011-61 1.907 Genera Commercial 1023-011-62 1.669 Genera Commercial 1023-011-63 0.765 Genera Commercial 1023-011-64 1.148 Genera Commercial 1023-091-05 16.056 Genera Commercial 1023-131-08 0.317 Genera Commercial 1023-491-46 0.97 . Genera Commercial 1023-491-47 1.567 Genera Commercial 1024-431-04 1.5 Neighborhood Commercial 1024-431-05 7.171 Neighborhood Commercial 1024-461-08 5.516 Neighborhood Commercial 1025-251-01 9.32 General Commercial 1025-261-36 0.308 Neighborhood Commercial 1025-452-02 0.23 Business Park 1025-461-01 6.891 Business Park 1025-461-02 2.015 Business Park 1025-461-03 7.125 •Business Park 1025-471-01 6.298 Business Park 1025-471-02 0.024 Business Park 1025-471-03 0.999 Business Park 1025-471-04 0.777 Business Park 1025-481-01 9,622 Business Park 1025-481-02 8.227 Business Park 1025-511-01 4.977, Business Park 1027-121-11 1.678 Business Park 1027-121-11 2.908 Business Park 1027-121-12 6.398 Commercial Recreation 1027-121-19 30.177 Commercial Recreation 1027-121-20 7.615 Commercial Recreation 1027-121-21 13.326 . Commercial Recreation 4 < ' (` 'j ( - .. EXHIBIT'A AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES CITY OF CHINO HILLS List of Commercial and Industrial Parcels as of January 1, 1999 ASSESSOR'S PARCEL, ZONING NUMBER ACRES DESIGNATION Undeveloped Parcels 1027-491-02 12.501 General Commercial 1028-093-02 0.143 Neighborhood Commercial 1028-093-03 0.143 Neighborhood Commercial 1028-093-04 0.138 Neighborhood Commercial 1028-191-01 1.942 Light Industrial 1028-191-02 1.238 Light Industrial 1028-191-03 0.829 Light Industrial 1028-191-04 6.518 Light Industrial 1028-192-01 4.35 Light Industrial 1028-201-04 0.738 Business Park 1028-201-16 0.147 Business Park 1028-201-73 0.336 Business Park 1028-201-76 19.035 Business Park 1028-201-77 21.845 Business Park 1028-201-78 7.647 Business Park 1028-201-78 10.963 Business Park 1028-351-02 2.6 Commercial Recreation 1028-351-06 0.732 Business Park 1028-351-07 21.564 Business Park 1028-351-18 6.723 General Commercial 1028-351-24 1.328 General Commercial 1028-351-30 7.253 General Commercial 1032-261-14 0.322 Neighborhood Commercial 1032-261-15 1.07 Neighborhood Commercial 1032-261-16 5.353 Neighborhood Commercial 1032-261-17 0.914 Neighborhood Commercial 1032-261-18 0.109 Neighborhood Commercial 1057-321-02 6.744 Neighborhood Commercial 1057-321-06 0.814 Neighborhood Commercial 1057-321-07 0.709 Neighborhood Commercial 1057-321-08 1.87 l Neighborhood Commercial 5 . -- '^ ) EXHIBIT A AGREEMENT FOR TRANSFER OF PROPERTY TAX REVENUES CITY OF CHINO HILLS SUMMARY OF TOTAL ACRAGE as of January 1, 1999 ZONING STATUS ACRES BUSINESS PARK Developed 27.07 Undeveloped 170.02 Portion Designation 54.46 Subtotal 251.55 GENERAL COMMERCIAL Developed 86.64 Undeveloped 129.42 Subtotal 216.06 NEIGHBORHOOD Developed 50.27 COMMERCIAL Undeveloped 63.56 Portion Designation 313.85 Subtotal 427.68 COMMERCIAL Developed 671.69 RECREATION Undeveloped 60.12 Subtotal 731.81 LIGHT INDUSTRIAL Undeveloped 14.88 TOTAL COMMERCIAL AND INDUSTRIAL 1,641.98 6