COUNTY OF SAN MATEO

Inter-Departmental Correspondence

COUNTY MANAGER’S OFFICE

DATE:

March 30, 2009

BOARD MEETING DATE:

April 14, 2009

SPECIAL NOTICE/HEARING:

No

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

David Boesch, County Manager

SUBJECT:

Redistribution of property tax revenues of Skyline County Water District upon dissolution.

RECOMMENDATION:

Adopt a resolution authorizing redistribution of property tax of the Skyline County Water District to remaining agencies within current District boundaries upon dissolution of the District.

VISION ALIGNMENT:

Responsible, effective and collaborative government

Goal(s): County and local governments effectively communicate, collaborate and develop strategic approaches to issues affecting the entire County.

BACKGROUND:

The Local Agency Formation Commission (LAFCo) governs organizational changes of municipal agencies including dissolution of a special district. Skyline County Water District (“SCWD”) has applied to LAFCo to dissolve. Revenue and Taxation Code Section 99(b) requires that when an organizational change would affect the service area or responsibility of an independent special district, the County shall negotiate on behalf of the special district regarding the transfer of property tax associated with those changes. The County’s resolution authorizing the tax transfer must be in place before LAFCo may schedule a hearing on the dissolution.

DISCUSSION:

SCWD has applied for dissolution because it has agreed to sell its water system and assets to a private company, California Water Service Company, and the District will no longer provide water services. There is no public agency that would be the long-term successor to the SCWD’s service responsibilities. Under state law, the County would be the short-term successor for the sole purpose of winding of SCWD’s business. SCWD’s fund balance and accounts receivable will succeed to the County for this purpose.

SCWD receives between 5.7%-6.7% of the 1% property tax within 42 tax rate areas within the District boundaries. SCWD’s boundaries include parts of the County of San Mateo, County Library, County Fire, San Mateo County Community College District, Sequoia High School District, Portola Valley Elementary School District, Woodside Elementary School District, Redwood City Elementary School District, Cabrillo Unified School District, Midpeninsula Regional Open Space District, San Francisquito Flood Control Zone, Woodside and Coastside Fire Districts, Sequoia Health Care District, Resource Conservation District, Harbor District, Bay Area Air Quality District and the Town of Woodside. Absent a finding that a particular agency or agencies should succeed to SCWD’s property tax revenues after the District dissolves, redistribution of the District’s property tax proportionately to the remaining agencies would be based on their current shares of the 1% property tax. The County Controller’s Office would calculate redistribution based on incremental factors, i.e. the share of the 1% property tax, of each agency within each of the 42 tax rate areas that comprise current District boundaries.

FISCAL IMPACT:

SCWD’s property tax subject to redistribution is approximately $231,000 annually, after shift of property tax to local school districts through the Educational Revenue Augmentation Fund (ERAF). Increases in tax receipts for affected agencies will vary according to each agency’s proportional share of revenues within the tax rate areas.