Title
Chief Administrative Office recommending the Board, regarding the Diamond Springs-El Dorado Fire Protection District dissolution and annexation of District Area to the El Dorado County Fire Protection District, LAFCO Project 2025-01:
1) Adopt and authorize the Chair to sign Resolution 164-2025 accepting the exchange of property tax base and increment for the annexation of all parcels within the Diamond Springs-El Dorado Fire Protection District into the El Dorado County Fire Protection District service area;
2) Adopt and authorize the Chair to sign Resolution 165-2025 approving a one-time payment of $400,000 to El Dorado County Fire Protection District finding a public benefit will be derived from the payment to cover costs of required studies, founding documents, updated Board of Director and District policies, and Local Agency Formation Commission fees, related to the reorganization of the Diamond Springs-El Dorado and El Dorado County Fire Protection Districts to stabilize and enhance the sustainability of fire protection services to residents and visitors in the Diamond Springs-El Dorado area of the County; and
3) Approve and authorize the Chair to sign a Fiscal Year 2025-26 Budget Transfer Request to increase Contributions to a Non-County Government Agency appropriations by $400,000, using the Fair Market Value Designation contingent upon the receipt of LAFCO’s certificate of completion of the reorganization. (4/5 vote required)
FUNDING: General Fund.
Body
DISCUSSION / BACKGROUND
Background
Fire and emergency medical (non-transport) services in El Dorado County are delivered by 12 independent special districts and the City of South Lake Tahoe. Revenues and service levels vary across districts and following the implementation of Proposition 13 in 1978 there have been discussions about how to ensure the fire service in the County is sustainable into the future.
While the County does not have direct responsibility for the provision of fire protection services, the Board of Supervisors has engaged in various efforts to support the fire districts over the years. In the early 2000s, the County provided General Fund financial support to several districts with the lowest property tax shares, a program known as “Aid to Fire.” This program was discontinued in 2016, with the recognition that the year-to-year funding to individual districts was not sustainable for the County financially and it was not addressing the structural issues facing the fire service. A countywide, system-wide perspective would be needed and any assistance from the County should support increased coordination and efficiency.
The 2017-18 Grand Jury issued a report that recommended consolidation of districts and further recommended that the County lead such an effort. The Board of Supervisors’ response agreed that consolidation should be considered as one of the potential options for bolstering the fire service, but stopped short of adopting the recommendation that the Board direct creation of a plan to consolidate districts. This was based on consistent feedback from the districts indicating they felt the ideas for consolidating or reorganizing districts should be driven by the districts, and not the County. The Chief Administrative Office and the Board’s Fire and EMS Ad Hoc Committee continued to engage in the sustainability discussions alongside the districts and in 2019, the Board of Supervisors included in its Strategic Plan a theme to “Support Fire Districts’ Reorganization and Consolidation when requested.” At the time, it was contemplated the support might include assistance with costs of the LAFCO process, including needed fiscal and municipal service studies, or other one-time costs, such as infrastructure investments, that would help remove barriers to district reorganizations.
Diamond Springs-El Dorado/El Dorado County Fire Annexation
The Boards of Directors for the Diamond Springs-El Dorado Fire Protection District (FPD) and the El Dorado County FPD unanimously adopted joint resolutions of application to LAFCO on November 21, 2024, requesting the annexation of the Diamond Springs-El Dorado FPD’s service area and sphere of influence into the El Dorado County FPD - Shingle Springs Zone, along with the concurrent dissolution of the Diamond Springs-El Dorado FPD. The proposed reorganization will consolidate the staff, operations, facilities, budgets, and governing boards of both agencies under the El Dorado County FPD moving forward.
Since February 2023, Diamond Springs-El Dorado FPD and El Dorado County FPD have engaged in joint annexation discussions and operational planning. In March 2023, El Dorado County FPD personnel began joint staffing of Diamond Springs-El Dorado FPD stations and ground transport ambulance operations. In April 2024, Diamond Springs-El Dorado FPD and El Dorado County FPD jointly had prepared a comprehensive Annexation Feasibility Study, which addresses each District’s history; current service delivery, staffing, fleet, and stations; and a detailed analysis of the proposed service plan, financial projections, future growth, and joint annexation performance measures once the reorganization is complete.
Resolution Accepting Exchange of Property Tax Base and Increment for Parcels in Diamond Springs-El Dorado FPD (Action #1)
This resolution is required in order to approve the transfer of all current property tax revenue, including base and increment within Diamond Springs-El Dorado FPD to El Dorado County FPD upon completion of the annexation. Both fire districts must also adopt resolutions to accept the exchange of property tax base and increments, which is anticipated to occur in November 2025.
For parcels included in Exhibits 2025-01-A through 2025-01-AK, the entire base and increment from Diamond Springs-El Dorado FPD will be transferred to El Dorado County FPD, with no changes to any other agencies in those Tax Rate Areas (TRAs).
For parcels included in Exhibits 2025-01-AL through 2025-01-AN, services will be provided by El Dorado County FPD, but no increment is currently allocated to Diamond Springs-El Dorado FPD. In accordance with Revenue and Taxation Code Sections 99 and 99.01, negotiations have been completed regarding the redistribution of the property tax increments applicable to specific parcels within the TRAs in Exhibits 2025-01-AL through 2025-01-AN.
The recommended distribution in Exhibits 2025-01-AL and 2025-01-AN reflect the following adjustments:
-A decrease in the increment provided to the County General Fund from 39.2556% to 20.3385%
-A decrease in the increment provided to the County Capital Outlay Fund from 0.8142% to 0.4218%
-A decrease in the increment provided to the Road District Tax from 3.9394% to 2.0410%
-A decrease in increment provided to CSA 7 from 2.6444% to 1.3701%
-A decrease in increment provided to the County Water Agency from 1.2853% to 0.6659%
-An increase in increment provided to El Dorado County Fire by 23.1016%.
The recommended distribution in Exhibit 2025-01-AM reflects the following adjustments:
-A decrease in the increment provided to the County General Fund from 36.0918% to 21.0224%
-A decrease in the increment provided to the County Capital Outlay Fund from 0.7485% to 0.4360%
-A decrease in the increment provided to the Road District Tax from 3.6218% to 2.1096%
-A decrease in increment provided to CSA 7 from 2.4313% to 1.4162%
-A decrease in increment provided to the County Water Agency from 1.1817% to 0.6883%
-A decrease in increment provided to El Dorado Irrigation District from 8.0600% to 4.6947%
-An increase in increment provided to El Dorado County Fire by 21.7679%.
There is no impact to the school agencies in any of the TRAs contained in the exhibits.
Resolution Approving a One-Time Payment to El Dorado County FPD (Action #2)
This resolution documents the public benefit derived from the negotiated payment of $400,000 to El Dorado County FPD for administrative costs, such as required studies, founding documents, updated Board of Director and District policies, and Local Agency Formation Commission fees. The resolution orders the Auditor to disburse the funds to El Dorado County FPD within 45 days following the County's receipt and approval of documentation from El Dorado County FPD evidencing the completion of the reorganization. This payment will be funded by the General Fund Fair Market Value Adjustment Designation. This funding provided to El Dorado County FPD is in line with past Board direction and philosophy of fire district consolidation and will help complete the annexation.
Budget Transfer (Action #3)
The budget transfer uses the Fair Market Value Designation to cover the cost of the one-time payment from the General Fund. The budget transfer will only be processed once the County is in receipt of LAFCO’s certificate of completion of the reorganization.
It is important to note that the County does not currently have policy on jurisdictional reorganizations, and the contributions from the County in this instance should not be construed as precedent-setting. The Chief Administrative Office has been working with a consultant to develop of a policy guiding the County’s role in reorganizations and providing guidance on if or when the County should participate financially. The policy is expected to be completed early in 2026.
ALTERNATIVES
The Board could choose an alternate distribution of property tax increments and/or not to reimburse costs for the reorganization.
PRIOR BOARD ACTION
N/A
OTHER DEPARTMENT / AGENCY INVOLVEMENT
El Dorado Local Agency Formation Commission, County Counsel
FINANCIAL IMPACT
The lump sum payment of $400,000 will be from the General Fund Fair Market Value Adjustment Designation. This designation was established to help offset the impacts of future adjustments required by the Governmental Accounting Standards Board (GASB) which reduce General Fund fund balance due to difference between the book value and market value of the County's investments at the end of each fiscal year. The amount remaining in the designation following this payment would be approximately $2 million. At the end of Fiscal Year 2024-25, there was not a fair market value adjustment and in the prior year it was $2.3 million.
The proposed adjustments to the annual tax increment factors in Exhibits 2025-01-AL through 2025-01-AN would not reduce the amount of base General Fund property tax the County receives in the area being annexed, but it would reduce the County’s future share of revenue growth in the area. The amount forgone by the County would vary based on the actual growth in the equalized tax roll, but is estimated to be less than $100 in the first year following the effective date of the adjustments.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Board Clerk to obtain the Chair’s signature on the resolutions and budget transfer and return to the Chief Administrative Office, Attn: Alison Winter.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Alison Winter, Principal Management Analyst