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Chief Administrative Office recommending the Board provide direction regarding the exchange of property tax increments for the annexation of two parcels (APNs 331-221-035-000 and 331-221-036-000) associated with the previously approved El Dorado Senior Village Apartments project into the El Dorado Irrigation District water and sewer service area, Local Agency Formation Commission Project 2024-02. (District 3) Options include the following:
1) Adopt and authorize the Chair to sign Resolution 018-2025, which would accept an exchange of property tax increment determined in accordance with the County's current practice for allocating increment upon annexation of a parcel into a service-providing district; or
2) Direct an alternative exchange of property tax increment. (Cont. 2/4/2025, Item 5 2)
FUNDING: General Fund.
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DISCUSSION / BACKGROUND
The El Dorado Senior Village Apartments Annexation to the El Dorado Irrigation District (EID), LAFCO Project No. 2024-02, will annex two parcels (APNs 331-221-035-000 and 331-221-036-000) of approximately 8.08 acres into the EID water and sewer service area. Pursuant to the application filed with LAFCO, the purpose of the annexation is to obtain water and wastewater services to support the development of the El Dorado Senior Village Apartments. The owner of the parcels intends to develop an affordable, age-restricted community housing development, consistent with current zoning. The annexation triggers the requirement under the law to redistribute property tax increments applicable to the properties being annexed.
CAO staff is currently working on a policy to establish a framework for redistributing property tax during jurisdictional reorganizations; however, while that policy is in process, staff have continued to follow the current practice for allocating increment upon annexation of a parcel into a service-providing district. This process includes setting the tax increment shares equal to those in adjacent tax rate areas (TRAs) that include the same taxing entities, and yielded the following changes to the entities' tax increment shares:
-A decrease in the increment provided to the County General Fund from 29.9612% to 28.6227%
-A decrease in the increment provided to the County Capital Outlay Fund from 0.6214% to 0.5936%
-A decrease in the increment provided to the Road District Tax from 3.0066% to 2.8723%
-A decrease in increment provided to CSA 7 from 2.0183% to 1.9281%
-A decrease in increment provided to Diamond Springs/El Dorado Fire Protection District from 23.1016% to 22.0695%
-A decrease in increment provided to the County Water Agency from 0.9811% to 0.9373%
-An increase in increment provided to El Dorado Irrigation District by 2.6667%.
Other details of the proposed exchange of tax increment are included in Exhibit 2024-02-A to the Resolution.
A letter outlining the above proposed allocation was distributed to all affected agencies and the item was placed on the Board of Supervisors agenda for February 4, 2025. The item was continued off calendar by the Board of Supervisors after the CAO had received inquiries about the redistribution of General Fund property tax increment. The CAO met with the Board's Budget Ad Hoc Committee to discuss options and the Committee and CAO staff then met with representatives of EID. EID representatives indicated that their rate structure depends on receiving a share of property tax increment from the parcels it serves, and that service to the parcels in question would not be feasible without their requested increment share of 2.6667%; however, the Board does have discretion to adopt an alternative allocation. If the Board directs an alternative allocation, staff would need to request a time extension from LAFCO to complete additional negotiations or notification to the affected agencies.
ALTERNATIVES
The Board could choose an alternate distribution of property tax increment.
OTHER DEPARTMENT / AGENCY INVOLVEMENT
El Dorado Local Agency Formation Commission
FINANCIAL IMPACT
The fiscal impact to the General Fund is a decrease of approximately $326 annually, based on the current assessed value of the vacant property; however, once the property is developed, the forgone revenue would be 1.3385% of the annual tax increment on the improved value of the parcels. The Accumulative Outlay Fund and the Road Fund would also forgo 0.0278% and 0.1343%, respectively.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Board Clerk to send a copy of the signed resolution to Alison Winter for distribution.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Alison Winter, Principal Management Analyst