Title
Approve the property tax transfer resolution for the proposed Paraiso Hot Springs Sphere of Influence Amendment and Annexation to the Mission Soledad Fire Protection District.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Approve the Property Tax Transfer Resolution for the proposed Paraiso Hot Springs Sphere of Influence Amendment and Annexation to the Mission Soledad Fire Protection District.
SUMMARY:
The Local Agency Formation Commission (LAFCO) of Monterey County is in receipt of an application involving a sphere of influence amendment and annexation of the Paraiso Hot Springs property to the Mission Soledad Fire Protection District. The property is located at the end of Paraiso Springs Road in the Soledad area and is zoned “VO” (visitor serving). Approximately one-third of the property is currently located within the fire district boundaries, but the remaining two-thirds of the property do not lie within the fire district boundaries. The matter cannot be considered by LAFCO until a property tax transfer has been approved by the Board of Supervisors and the Fire District Board of Directors.
DISCUSSION:
The Board of Supervisors has adopted a property tax transfer formula which provides that fire protection districts are to be allocated a portion of the County property tax growth increment. The formula reflects the County’s 40 % loss of property tax revenue that was imposed by the State during fiscal year 1993-94 and remains in effect today. This State-imposed property tax shift is known as the Education Relief Augmentation Fund (ERAF). Non-affected jurisdictions not involved in the annexation retain their percentage share of property taxes collected within the affected tax rate area. The Mission Soledad Fire District and the County of Monterey will share the amount of property tax increment available for distribution based on a percentage rate intended to facilitate the previously approved economic development of Paraiso Hot Springs Resort.
In 2019, the Monterey County Planning Commission approved a Combined Development Permit for the reconstruction and visitor-serving use of Paraiso Hot Springs Resort. The property is located at the westerly portion of the Mission-Soledad Rural Fire Protection District. Part, but not all, of the property is within the current fire district boundary. To provide adequate fire and emergency medical service, Condition 17 of the County approval requires that “the applicant shall submit an application to LAFCO to annex the entire property into the Mission-Soledad Rural Fire Protection District.” The annexation of the property to the fire district requires that the Board of Supervisors approve a property tax-sharing agreement, which is the subject of this Board report.
Due to the extremely low rate of property tax increment historically received by the fire district, and given the size, complexity, and significance of this economic development project both locally and regionally, staff has entered into discussions with the fire district and proposes that, for this specific project only, the district receive a total property tax increment rate of 11.5% for the Paraiso Hot Springs property. Staff recommends that this property tax increment rate is appropriate given the need for fire and emergency service resources contemplated by the County’s permit condition requiring annexation to the fire district. Because the Paraiso Hot Springs project is a critical County economic development project, the proposed property tax increment rate is considered to be an “economic development property tax mitigation”, that is, to facilitate an economic development project previously approved by the Board of Supervisors. Staff is recommending this increment rate to ensure that the fire district has adequate property tax revenue to provide necessary fire protection and emergency response services to the Paraiso Hot Springs project. Staff has communicated to the district that the proposed property tax increment rate is being recommended for this project only and is not intended to be precedent-setting for future potential annexations to this fire district. The proposed tax increment rate would apply to the entire property.
OTHER AGENCY INVOLVEMENT/COMMITTEE ACTIONS:
The Mission Soledad Fire District concurs with the recommended action. Calculation of the property tax transfer was initially prepared by CAO staff and reviewed by the Auditor-Controller.
FINANCING:
Property tax increment would be distributed to the fire district pursuant to the attached resolution. This distribution would occur over time as the project develops and assessed value increases.
BOARD OF SUPERVISORS STRATEGIC PLAN GOALS:
Mark a check to the related Board of Supervisors Strategic Plan Goals:
____ Well-Being and Quality of Life
X Sustainable Infrastructure for the Present and Future
____ Safe and Resilient Communities
X Diverse and Thriving Economy
Prepared and approved by: Nick Chiulos, Chief Assistant CAO
Attachments:
- Proposed Paraiso Springs Annexation Map/LAFCO approved sphere of influence
- Draft resolution
CC:
John Kesecker, Mission-Soledad Rural Fire Protection District
Ken Wysocki, LAFCO Executive Officer
Enedina Garcia, Auditor-Controller
Jake Stroud, Treasurer-Tax Collector
John Thompson, Paraiso Hot Springs