To: Board of Supervisors
From: County Administrative Office
Agenda Section: Consent
Vote Requirement: Majority
SUBJECT:
title
Secured Property Tax Revenue Exchange Agreement with the Arcata Fire Protection District
end
RECOMMENDATION(S):
Recommendation
That the Board of Supervisors:
1. Approve the attached tax exchange agreement proposal submitted by the Arcata Fire Protection District; and
2. Adopt the attached resolution authorizing a secured property tax revenue exchange between the County of Humboldt and the Arcata Fire Protection District; and
3. Approve, and authorize the Chair of the Board to execute, the attached secured property tax revenue exchange agreement with Arcata Fire Protection District; and
4. Authorize the Auditor-Controller to administer the exchange of secured property tax revenues between the County of Humboldt and the Arcata Fire Protection District and make technical corrections as needed
Body
STRATEGIC PLAN:
The recommended actions support the following areas of the Board of Supervisors’ Strategic Plan:
Area of Focus: Safe & Healthy Communities
Strategic Plan Category: 1001 -Support and sustain partnerships between public safety and partner agencies to enhance public safety in our communities
DISCUSSION:
On April 9, 2019, staff presented the Humboldt County Board of Supervisors with a report on fire services funding strategies for the County of Humboldt. This report outlined service gaps and funding options for areas located outside the boundaries of any local fire service-related district. These areas face unique challenges as no government agencies are legally responsible for providing structure fire protection to these areas. For that reason, finding a long-term solution for sustaining service delivery to out-of-district areas has proven a challenge. To address these challenges the Board adopted a group of strategies and expectations to enable local fire service providers to utilize property tax sharing agreements with the County of Humboldt in support of annexation, formation, or consolidation. The strategy included several tax exchange agreement options available through April 9, 2027.
Since 2019, the Fire Services Working Group, consisting of County of Humboldt staff, Humboldt County Fire Chiefs’ Association representatives, Local Agency Formation Commission staff, and an ad hoc committee of the Board of Supervisors, currently Supervisors Bushnell and Madrone, worked with local fire service providers to apply the approved strategies to incentivize fire service-related district annexations, consolidations, and formations.
The Arcata Fire Protection District (“AFPD”) held a public hearing on December 12, 2023, where they adopted a resolution of application (Resolution No. 23-297) to the Humboldt Local Agency Formation Commission to annex the district’s approximately three thousand five hundred sixty-one (3,561) acre out-of-district goodwill response area. On March 20, 2024, the Humboldt Local Agency Formation Commission conditionally approved the proposed annexation.
The AFPD annexation is not proposed to accommodate new development. Rather the proposal is intended to expand the AFPD district boundary to reflect the developed areas that are currently being served as part of the AFPD goodwill response area and to secure funding and support the sustainability and improvements to the level of service. The annexation would support the improvement of essential community fire protection services for residents located along both Upper Jacoby Creek Road and Lower Fickle Hill Road.
AFPD has been working towards earning Tax Exchange Agreement Offer No. 2 and submitted a proposal outlining a plan to ensure that all expectations are met. If the proposal is approved, Offer 2 will transfer a portion of the county’s property tax within the annexation area at a rate of fifty percent (50%) of the district’s tax allocation factor for base, and one hundred percent (100%) of AFPD’s tax allocation for growth in property tax, after annexation. If the Humboldt County Board of Supervisors elects to enter into a secured property tax revenue exchange agreement based on Tax Exchange Agreement Offer No. 2 with the AFPD, the following estimates would apply:
• Base Transfer: Based on the total assessed value of land and improvements within the proposed annexation area provided by the Assessor, a total of Two Hundred Thirty-Six Thousand Three Hundred Seventy-Five Dollars ($236,375.00) in property tax revenue will be generated from the area in question.
o Of that amount, the County of Humboldt would transfer a total of Six Thousand Seven Hundred Twenty-Four Dollars ($6,724.00) in property tax revenue to AFPD, or 2.8448% of total property tax revenue within eight Tax Rate Areas that are a part of the annexation area. This represents fifty percent (50%) of AFPD’s average tax allocation factor.
• Tax Increment or Growth: The transfer from the county to the AFPD, as specified above, would permanently become a part of AFPD’s base property tax revenue and each fiscal year thereafter, AFPD would receive a share of any actual property tax growth within the annexation area equivalent to its average tax increment factor (5.6896%).
If the attached secured property tax revenue exchange agreement with AFPD is approved and executed, and all other conditions met, the transfer would occur beginning in fiscal year 2025-2026. The successful execution of a tax exchange agreement with the county is a condition of the AFPD’s proposed annexation. If the agreement is not executed, the annexation will not move forward.
Based on the information provided in this report and associated attachments, staff recommends that the Board take the recommended actions to ensure continued and sustainable community fire and rescue services for the areas in question.
SOURCE OF FUNDING:
General Fund - Secured Property Taxes (1100-888); Measure Z (1100-889)
FINANCIAL IMPACT:
|
Expenditures (1100-888) |
FY25-26 Projected* |
FY26-27 Projected* |
|
Base Transfer |
$6,724.00 |
$7,074.00 |
|
Total Transfers |
$6,724.00 |
$7,074.00 |
|
Funding Sources (1100-888) |
FY25-26 Projected* |
FY26-27 Projected* |
|
General Fund |
$6,724.00 |
$7,074.00 |
|
Total Funding Sources |
$6,724.00 |
$7,074.00 |
*Projected amounts are estimates and are subject to change.
The financial impacts to the General Fund are estimated as follows, beginning in fiscal year 2025-2026:
Arcata Fire Protection District:
• Six Thousand Seven Hundred Twenty-Four Dollars ($6,724.00) in base transfer from the County of Humboldt to AFPD that would occur in fiscal year 2025-2026 and become a part of AFPD’s base thereafter.
• It is estimated that in the first fiscal year after the annexation, the share of property tax growth that would have gone to the county General Fund but instead will go to the AFPD will be approximately Three Hundred Fifty Dollars ($350.00), and the amount of property tax revenue growth received by the AFPD, which would have previously gone to the General Fund, would likely increase each year thereafter.
To date, the Board of Supervisors has approved three property tax agreements consistent with the 2019 policy: Rio Dell Fire Protection District annexation/consolidation (base transfer of Forty-Three Thousand Five Hundred Forty-Four Dollars ($43,544.00) and growth in first year approximately Nine Hundred Dollars ($900.00)), Garberville Fire Protection District annexation/consolidation (base transfer of Two Hundred Eight Thousand Two Hundred Thirty-One Dollars ($208,231.00) and growth in first year approximately Six Thousand Seven Hundred Fifty Dollars ($6,750.00)) and Salmon Creek Fire Protection District formation (base transfer of Zero Dollars ($0.00) and growth in first year approximately Four Hundred Forty Dollars ($440.00)). With the addition of the AFPD annexation (base transfer of Six Thousand Seven Hundred Twenty-Four Dollars ($6,724.00) and growth in the first year, approximately Three Hundred Fifty Dollars ($350.00), the total cumulative impact would equal Two Hundred Sixty-Six Thousand Nine Hundred Thirty-Nine Dollars ($266,939.00) (sum of base and growth after year 1). This represents fifty-eight percent (58%) of the Four Hundred Sixty Thousand Dollars ($460,000.00) that was estimated in the 2019 Board Report if all jurisdictional changes and associated property tax agreements were to take place at the same time.
Funding related to preparing the attached property tax agreement was funded by the Humboldt County Fire Chiefs’ Association allocation of Measure Z funds.
STAFFING IMPACT:
The recommended actions will not impact current staffing levels. However, ongoing work related to future property tax agreements with fire districts will likely be funded by Measure Z and carried out by County of Humboldt staff and other local agencies.
OTHER AGENCY INVOLVEMENT:
Humboldt Local Agency Formation Commission
ALTERNATIVES TO STAFF RECOMMENDATIONS:
The Board may choose not to take the recommended actions. However, this alternative is not recommended because of the benefits the proposed actions will have for sustaining critical community emergency services and public health and safety for citizens of Humboldt County
ATTACHMENTS:
1. Summary of Board Approved Tax Exchange Agreement Offers
2. Arcata Fire Protection District Tax Exchange Agreement Proposal
3. Resolution of the Arcata Fire Protection District Authorizing a Secured Property Tax Revenue Exchange Between the Arcata Fire Protection District and the County of Humboldt
4. Resolution Authorizing a Secured Property Tax Revenue Exchange Between the County of Humboldt and the Arcata Fire Protection District
5. Secured Property Tax Revenue Exchange Agreement with the Arcata Fire Protection District
PREVIOUS ACTION/REFERRAL:
Meeting of: April 9, 2019
File No.: 19-501